Ethereum emerges from Bitcoin’s shadow
Standing on stage before the Bitcoin elite in Miami, 19-year-old Vitalik Buterin began his pitch for what he envisaged to be the future of the internet and digital currencies.
The gifted Russian programmer carefully laid out his plans for Ethereum, a cryptocurrency technology that he believed would enable millions of apps to operate in a fully decentralised way – meaning they would not be controlled or owned by any one person.
“Bitcoin is very good for transferring money,” he said, “but it was not designed as a layer for protocols to be built on top.”
The cryptocurrency of the Ethereum network, Ether, is now worth more than £287bn. Its price has risen more than 1,500pc in the past year with each coin trading at around $3,500 (£2,520).
Its rise is impressive when compared to Bitcoin, the world’s biggest crypto asset, which has seen its value increase by more than 480pc in the past 12 months. One Bitcoin is now worth close to $60,000.
Ethereum Price Jumps To New All-Time High As Institutions Pile In
The Ethereum price has set a new record over the weekend, gaining 10% to $3,960. JPMorgan outline why this may be the start.
The recent rally in Ethereum shows no signs of stopping just yet, and the coin continues to eat away at Bitcoin’s market share.
The 450% rally (so far) in The Ethereum price in 2021 now has the coin’s value at almost half a Trillion US Dollars. The number #2 ranked digital assets total valuation is now $448,000,000,000 and, according to JP Morgan, may be set to climb much higher.
Whilst Bitcoin has struggled to break new ground in the last 6 weeks, Ethereum has soared. ETH has outperformed BTC/USD by 4 times since the start of April.
Ethereum and others, including Dogecoin, have grabbed more than the headlines. They have also grabbed market share from Bitcoin.
Bitcoins’ failure to make news highs has seen its market share drop from 60% to just under 45%.
This reminds me of the market in late 2017/early 2018. Although for different reasons. Bitcoin’s decline in market share has less to do with a declining BTC price and all to do with a rising Ethereum price.
Institutional Investment Soars
A report by JP Morgan has outlined why Ethereum has and could continue to outperform Bitcoin. The report details how investors are embracing ETH at a growing pace.
In April, four new Ethereum ETFs’ were launched. This has made it easier for institutional investors to profit from the rising Ethereum price.
Open interest in the CME Ethereum futures surged in April. This indicates that Institutions bought more than $250 Million of Ethereum over the period.
Ethereum Outlook
I believe the current extension could see the Ethereum price test $5,000 level over the coming sessions.
The price has now cleared an ascending triangle formation, that had been building since the 3rd of May. This breakout level at $3,600 should now act as price support.
Often when the price breaks a trend line, it revisits that price before continuing the move. A pullback in price to the top of the formation would offer a better entry point for longs.
Longs may want to place stops beneath the lower end of the triangle at $3,480. A failure to hold this line may see the price slip to $3,300 and then $3,165.
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Crypto analyst who nailed ethereum’s climb to $3,400 says $10,000 is next
Back in January, when the world’s second-largest cryptocurrency by market cap, ethereum, was trading at just over $1,200, one investor made the bold call of predicting a spike to the mid-$3,000 level, claiming it was being “overlooked” by investors.
Just under five months later, that prediction has already hit with ethereum (ETH-USD) up roughly 400% on the year to cross the $3,500 mark as of Friday afternoon. Now, that same investor, Megan Kaspar, co-founder of the digital asset investment company Magnetic, is upping her price target to the $8,000 to $10,000 price range by year’s end.
Kaspar explained her thesis Friday on Yahoo Finance Live, citing new updates coming to the cryptocurrency’s network later this year. The network is planning a shift away from the same method used by bitcoin (BTC-USD) to confirm transactions to one that is far less energy intensive. Unlike bitcoin’s so-called proof of work, which rewards miners who are competing against each other to use computers and energy to record and confirm transactions on its blockchain, ethereum plans to adopt the more efficient proof of stake model, which chooses a block validator at random based on how much ether it controls.
“The shift to proof of stake for block validation reduces carbon emissions by 99.9%, making ethereum a green technology,” Kaspar explained. “So these two updates on the network alone could push ethereum to a trillion dollar market cap which is where bitcoin is at today — that would make ethereum around $8,000 to $10,000 a coin.”
Ether has outperformed bitcoin year-to-date. The former is up nearly 380%, while bitcoin is up about 90% over the same time period.
As high as Kaspar’s price target sounds, which implies about 300% upside from current levels, it matches the $10,500 price target that came from Fundstrat Global Advisors earlier this year. Analysts there calculated their price target from rising activity on the ethereum network as more and more decentralized applications continue to be built on it. Decentralized finance applications, which allow users to earn yield on their crypto assets similar to the way they would at a traditional bank, have seen usage on the network explode from $10 billion in September 2020 to more than $65 billion as of April.
Story continues
After the network changes are implemented, Kaspar also believes a greener ethereum will begin to attract more institutional attention relative to bitcoin. Miners in China account for well over half of all the mining power on the network and investors like Kevin O’Leary of “Shark Tank” have increasingly taken issue with that connection. Kaspar says as more investors take note in the years to come, institutional dollars could propel ethereum to $100,000.
“Institutions are mandating that they invest in clean green technologies and that’s what ethereum is becoming,” she said. “Unfortunately, bitcoin’s proof of work network will not be that unless they choose to shift as well.”
Nonetheless, Kaspar still sees upside for bitcoin, predicting the world’s largest cryptocurrency could hit $200,000 by the end of the year. On Friday, bitcoin was trading at over $57,700 a coin. Pantera Capital CEO Dan Morehead expressed a similar level of confidence for bitcoin’s upside with his $115,000 price target by August, citing his model that tracks bitcoin like a commodity.
As he explained to Yahoo Finance earlier this week, “stock-to-flow” models measure existing supplies, usually of commodities, against the flow at which new inventory is produced. In the case of bitcoin mining, that flow in the form of mining rewards is cut in half roughly every four years. When applying the measure to bitcoin over the last year, Morehead has shown bitcoin’s price has moved in lockstep with projections.
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“When people say, ‘Oh this is crazy,’ I push back. I don’t think this is crazy. I’ve been doing this for 10 years, it’s actually very predictable,” he said.
Zack Guzman is an anchor for Yahoo Finance Live as well as a senior writer covering entrepreneurship, crypto, cannabis, startups, and breaking news at Yahoo Finance. Follow him on Twitter @zGuz.
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